The UK growth forecasts nudged up this year, amid warnings that interest rates could stay “higher-for-even-longer” due to sticky inflation and political uncertainty, says the International Monetary Fund’s latest report.

The Washington-based body predicts the UK economy will lift by 0.7% in 2024, up from its 0.5% forecast in April, and will be unchanged at 1.5% next year, in its latest World Economic Update.

The IMF did not single out the UK by name, but its warnings for developed economies over higher services inflation and wage growth run parallel with concerns held by more hawkish Bank of England policymakers.

The international institution says, “services price inflation is holding up progress on disinflation” adding that “nominal wage growth remains brisk”.

Since the start of the year, the headline rate of UK inflation has halved to 2%.

But BoE rate-setters have expressed concern and service price inflation and wage growth numbers hover around 6%.

The Office for National Statistics will release the latest cost-of-living figures tomorrow (17 July), the first inflation reading under the new Labour government.

The IMF adds: “Upside risks to inflation have thus increased, raising the prospect of higher-for-even-longer interest rates, in the context of escalating trade tensions and increased policy uncertainty.”

The BoE base rate has remained at a 16-year high of 5.25% since last August.

The last time the base rate was cut was in March 2020, with the central bank’s rate-setting Monetary Policy Committee next due to meet on 1 August.

The IMF upgraded eurozone growth to 0.9% from 0.8% this year, while global expansion in 2024 is unchanged at 3.2%.